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Sunday, May 4, 2014

Nepal and the knowledge economy

As economies shift workers and economic activities from low productivity to high productivity sectors, especially when they are near the middle-income threshold, advancing the knowledge economy helps them overcome the ‘middle income trap’— crucial for a continued and meaningful structural transformation. A knowledge economy not only propels high value added services activities, but also contributes to moving manufacturing activities up the value chain. Think of it as follows: With cheap labor cost a country can competitively produce normal garments and light machinery goods—all require either copying already existing techniques or importing intermediate raw materials and technology to produce these goods. But, to climb up the value chain and to not get stuck at lower middle- to middle-income levels, there has to be progress on four fronts so innovation and mastery of management skills takes place domestically, and these are readily absorbed by the backward firms in the value chain— contributing to a continual build up of competitiveness.

Innovative systems: royalty payments and receipts ($ per person), technical journal articles per 1 million people, patents granted to nationals by US Patent and Trademark Officer per 1 million people

So, where does Nepal stand in the cross-country knowledge economy indicators? Well, it stands well below the average for Asia and the Pacific. Below is a chart from ADB’s highlights from a forthcoming report titled “Asia’s Knowledge Economies: Next Policy Agenda”.

About

Formerly, economics officer at Asian Development Bank, Nepal Resident Mission. Worked as a researcher at SAWTEE, Kathmandu. Also, worked as a consultant for Ministry of Commerce & Supplies, Government of Nepal; FAO; UNDP, GIZ-CIM, and ADB among others. I was an op-ed columnist for Republica between December 2008 – June 2012. I also worked as a Junior Fellow for Trade, Equity & Development program at Carnegie Endowment for International Peace, Washington, D.C .